Which of the following best describes the Basel Committee on Banking Supervision's principles on customer due diligence?

Question

Options

• AMultilateral agreement between all members.
• BA recommendation to members and banks.
• CGenerally accepted terms issued by big international banks.
• DA country's initiative to increase the reputation of its financial market.

• A
  8% (2)
• B
  80% (20)
• C
  4% (1)
• D
  8% (2)

Explanation

The Basel Committee on Banking Supervision (BCBS) is a global standard-setting body for the prudential regulation of banks. It does not have any formal authority to enforce its standards, but relies on its members' commitment and peer pressure to implement them. The BCBS's principles on customer due diligence (CDD) are part of its guidelines on anti-money laundering and combating the financing of terrorism (AML/CFT), which aim to enhance the soundness and integrity of banking systems. The BCBS's principles on CDD provide guidance to banks and bank supervisors on the essential elements of a CDD programme, such as customer acceptance, identification, verification, risk assessment, monitoring, and record-keeping. The BCBS's principles on CDD are not legally binding, but are intended to be a benchmark for national practices and for banks to design their own policies and procedures. The BCBS's principles on CDD are consistent with the recommendations of the Financial Action Task Force (FATF), the global standard-setter for AML/CFT.

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